The Nasdaq Composite notched a new record high Monday, powered by a rally in major tech names and “growing conviction among traders that the Federal Reserve will cut interest rates,” affirms global financial advisory giant deVere Group.
The Nasdaq climbed 0.45% to close at 21,798.70, its highest ever. The S&P 500 rose 0.21% to 6,495.15 and the Dow Jones Industrial Average gained 0.25% to 45,514.95.
The moves come as investors digest Friday’s weak nonfarm payrolls report, which highlighted cracks in the labor market and sharpened bets that the Fed will deliver its first rate cut in years at next week’s meeting.
Nigel Green, chief executive of deVere Group, comments: “The Nasdaq’s record reflects more than enthusiasm for tech.
“It’s a clear signal that markets believe the Fed must pivot. Weak jobs data has tipped the balance. Investors are betting on a cut, almost daring the Fed to keep pace.”
Markets are fully pricing in a 25-basis-point reduction when the central bank concludes its September 17 policy meeting. Futures also reflect a 10% probability of a larger 50-basis-point move.
“Tech is at the forefront, but this rally is not just about chips and AI. It’s about liquidity and the conviction that cheaper borrowing costs are around the corner,” says Nigel Green.
“The market is voting with capital. It expects the Fed to act to prevent a sharper downturn.”
Bond yields continued to retreat as traders positioned for looser monetary policy. Futures now imply a two-thirds chance that rates fall to around 3.5%–3.75% by year-end. The shift highlights how rapidly expectations have changed since the weak payrolls report.
The deVere CEO adds: “The fact that investors are already looking for a series of cuts underscores the fragility of sentiment. Confidence in the economy is shaky, and markets are relying heavily on the Fed to extend this cycle.
“This dependence carries risk. If the Fed falls short of expectations, the rally could unwind just as quickly as it built.”
Attention now turns to upcoming inflation figures and the Bureau of Labor Statistics’ benchmark payroll revision later this week.
Both will be watched for confirmation that the labor market slowdown is intensifying enough to compel policymakers into deeper action.
“Even if inflation data comes in hotter, the Fed will likely treat tariff-related price spikes as temporary,” says Nigel Green.
“The priority now is stabilising growth. The market has understood that and has moved ahead of the Fed. The danger is that expectations are running further than the Fed is willing to go.”
The S&P 500 technology index rose 0.67% on Monday, while utilities led the laggards, falling 1.07%.
Overall breadth remained weak, with declining stocks outnumbering gainers within the S&P 500 by a ratio of one to one. Still, the Nasdaq recorded 136 new highs, a testament to the momentum concentrated in growth stocks.
“The Nasdaq’s record close captures a pivotal moment,” concludes Nigel Green.
“Markets are making a loud statement that they expect decisive action from the Fed. If that action comes, optimism will carry equities further. If it doesn’t, sentiment is likely to shift abruptly.”